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Today’s students good fit for future economy

Stephen Poloz, Governor of the Bank of Canada, right, wears his 1978 Queen's Arts & Sciences jacket as he speaks with Stephen J.R. Smith before addressing about 225 Queen's faculty, staff, students and members of the public at the Smith School of Business on Tuesday March 13 2018. Ian MacAlpine/The Whig-Standard/Postmedia Network

The Canadian economy may be expanding, Bank of Canada governor Stephen Poloz said, but to prove his body hasn’t expanded over the nearly 40 years since he last roamed the Queen’s University campus as an economics student, Poloz wore his 1978 Queen’s Arts & Sciences jacket during his speech to about 225 Queen’s faculty, staff and students and members of the public on Tuesday morning in the Goodes Atrium at the Smith School of Business.

“What do you think of this jacket?” he said at the start of his speech. “The jacket still fits and I didn’t get it at any vintage shop.”

Poloz said it was a Christmas gift in 1974.

In his speech, Poloz reminded the many students, some wearing business attire looking like they are ready for the workforce, that they will be needed for Canada’s growing economy.

“Those of you who hope to join the workforce may be feeling both excitement and nervousness about an uncertain future,” he told them. “At least the macroeconomic situation you face is a positive one. The economy has created 283,000 jobs over the past 12 months, and the unemployment rate is as low as it has been in more than 40 years.”

Poloz was appointed governor of the Bank of Canada in June 2013 for a seven-year term.

He also holds a master’s and PhD in economics from the University of Western Ontario.

As for Canada’s labour market, Poloz said there are good times ahead, but the central bank has to pay close attention to its monetary policy to avoid any recessions in the future.

“None of this highly desirable economic growth can happen unless there are people available to fill the newly created jobs,” he said in his “Future of Work” speech. “Accordingly, a healthy, well-functioning labour market is critical, particularly at this stage of the business cycle.”

Poloz said the baby boom generation is starting to leave the workforce. That generation fuelled labour force and economic growth for the past 50 years.

“This demographic support is now fading,” he said. “Immigration can help provide an important offset, but we should also be doing everything we can to develop untapped sources of labour supply within our existing population.”

He said young people represent one source of untapped potential.

Poloz also said a significant source of economic potential is higher labour force participation by women.

“While about 91 per cent of prime-age men participate in the labour force, the rate for women is only about 83 per cent.”

Also Indigenous Peoples, people with disabilities and immigrants to Canada should be adding to the workforce, he said.

Poloz added it is not much of a stretch to imagine that Canada’s labour force could expand by another half-million workers in the future.

He also spoke about the various industrial revolutions over time and people’s fears that machines would take over their jobs. This fear has existed since the first Industrial Revolution of the late 18th and 19th centuries, which saw the introduction of the steam engine and led to the first factories and urbanization.

“This spawned the Luddite movement — textile workers who fought against the technology that threatened their livelihood,” Poloz said.

Then came electicity and the combustion engine, followed by advancement in computing and communications technology to today, when technology will be taking over some traditional work done by humans.

“Importantly, all of these revolutions caused hardship for people in industries that were disrupted,” Poloz said. “Yet, the enormous gains in productivity and the advances these new technologies spawned form the basis of our modern economy.”

But he said that like all revolutions, there will always be human work to do.

“Whenever a groundbreaking technology arrives, a predictable pattern follows. The technology disrupts existing industries, leading to job losses,” he said. “But new companies will exploit these technologies to create new types of jobs and entirely new industries.”

He said that at the time of Confederation, about half of working Canadians were employed in some type of agriculture activity.

“As new technologies disrupted farming, fewer people were needed on the farm, yet farm output continued to expand.” Poloz said.

Today only two per cent of Canadians work in the agriculture sector.

“And, yet, agricultural output has more than tripled over the past century,” he said.

“We need to remember the positives — all the new jobs that will be created and the people who will be needed to build these vehicles, to write their software, to maintain the fleets once they are built, to redesign and construct roads, to co-ordinate traffic and so on.”

Poloz said that throughout history, technological advances have always led to rising productivity and living standards, and they have always created more jobs than they have destroyed.

“There is good reason to be optimistic about the Canadian economy,” he said. “These are exciting times. New opportunities, new technologies and new industries are all waiting right around the corner. The students here today will be the ones who will shape the future, with the tools developed through their imagination and ingenuity.

“I cannot wait to see how it turns out.”

After his speech, Poloz answered a few questions from students and faculty.

He then showed off a Bank of Canada prized possession: the new Canadian $10 bill featuring Viola Desmond.

It will be the first banknote featuring a Canadian woman who is not a parliamentarian and the first banknote that is a vertical orientation. It goes into circulation at the end of this month.